Embraer Sees Demand For Used Regional Jets

Embraer’s ECC Leasing subsidiary, which is actively promoting the parent company’s used regional jets in markets not usually associated with 50-seat jets, has expanded its reach into Russia.

The leasing company says it sees opportunities in South America; with oil, gas and mining companies operating in Africa; as a replacement and upgauge for operators of Beechcraft 1900 turboprops; and even as a new niche for smaller U.S. turboprop operators who want to take advantage of markets dropped by larger regional carriers.

“I’m not facing any sleepless nights” on placements, lease rates or purchase prices for ERJ-135 and ERJ-145 aircraft, says Managing Director Mark Dunnachie. “We have always advocated that the market is there.”

Nonetheless, with U.S. airlines—the biggest operators of regional jets—dramatically reducing their 50-seater fleets, ECC is taking steps to boost the potential markets.

Dunnachie, speaking to Aviation Week from Moscow, says ECC last month hired a local employee to establish an office in Russia. ERJs are certified in Russia, where Embraer foresees a need for as many as 200-300 50-seaters to accommodate demand for more regional services.

Rival Bombardier already has an office in Russia to promote its CRJ100 and CRJ200 aircraft, of which some 102 are currently in storage, according to the Aviation Week Intelligence Network (AWIN) fleet databases. But Dunnachie says Embraer and ECC can gain market share when they have more aircraft to place, which also would be younger than the CRJs, and by intensifying their sales efforts.

Dunnachie says Embraer’s efforts in Africa could be duplicated in Russia. In early August, the airframer appointed Airlink, an ERJ-135 operator since 2001, as its new Embraer Authorized Service Center for the ERJ-145 family. The agreement also includes establishing an Embraer spare parts distribution center in Johannesburg to serve ERJ-145 customers.

A new ERJ-145 simulator will be in Johannesburg before year-end in partnership with FlightSafety.

Difficult Markets

In the Middle East, where carriers typically have not shown interest in aircraft with fewer than 70 seats, ECC has “suddenly seen some breakthroughs,” Dunnachie adds. He cites UAE’s Rotana Jet taking delivery of three ERJ-145s, one of which came from ECC, as an indication of growing demand.

“A market typically not associated with 50-seater jets is starting to open,” he says.

Oil, gas and mining companies also are interested in smaller regional jets for transporting personnel. In one recent deal, an Australian mining company took an ERJ-135 to transport personnel from Johannesburg to Malawi and Namibia, and negotiations with other companies are under way, Dunnachie says.

However, there are signs of distress in placing used Embraer regional jets: 33 former Mesa Air Group ERJ-145s have sat in storage for two years, and 10 of those were just acquired by Aerovision International, which is considering whether to part out some of the aircraft, even though the oldest of them was built in 2000.

ECC says it currently has 18 ERJ-135s—about one-third under contract and one-third in negotiation—and about a half dozen ERJ-145s. Worldwide, there are 49 ERJ-145s and 44 ERJ-135s in storage, the AWIN fleets databases show.